Why should you outsource Application Support on a managed services mode ?

Technology is spreading its wings everywhere like wildfire and BFSI is not an exception to this. Rapid strides in Technology have resulted in exploring outsourced services & resources to render efficient service to customers.

Is it necessary to outsource services, given the strong and well-trained workforce available in sectors like BFSI ?

While I agree that staff available in BFSI are knowledgeable in handling domain related services, but their technical skills and experience may not be adequate enough to handle the latest technology products. Therefore, it is essential to get specialized resources having required skills as well experience in a specific current technology. The time and cost of imparting training to the internal staff in various emerging technologies are prohibitive compared to engaging service providers with required skill sets.

Second reason could be ramping up the resources whenever the need arises like Software Version Upgrades and Introduction of New Systems and products. Recruitment of skilled technical staff for a temporary period in any Organization is difficult, if not impossible. Managed services option provides such a flexibility as the service providers would be redeploying such skilled resources from some of the past projects with similar requirements.

The third one is the cost factor. The cost of the Managed services is always competitive as the same is market driven, while the cost of internal deployment of staff and other overheads will be high as they are bound to increase rapidly over a period of time.

The fourth reason is the maintenance of Quality of Service (QoS). The Institution can demand quality of service from service providers through enforcement of Service Level Agreement(SLA) and by enforcing penalty in the case of defaults, while it would be difficult to enforce such quality from internal staff, as most of them are on time scale appointments.

The fifth benefit of Managed Services is the availability of systems & resources as per the Institution’s requirements like Active-Active /Active-Passive Clusters, Network Load Balancing Services(NLBS), network redundancies, Disaster Recovery and Business Continuity infrastructure (DR &BCP), and technical resources to ensure 100% availability of systems to the Users both internal and external round-the-clock, which is possible to be enforced through contract terms & conditions with the service providers.

A survey made on this area has revealed the advantages of Managed Services Vis-à-vis In-House Services on a scale 10 for each criterion listed in the diagram shown below for the benefit of readers.

It can be seen that the Managed Services Model scores over In-house Model in all parameters except in the case of Employees’ Morale, as the fear is lurking around the staff on retrenchment (or) redeployment. As we cannot lose sight of this important aspect, the Institution should have necessary plans to redeploy them in suitable positions ( or) alternatively enlarge their Business and Business delivery points by absorbing these resources.

However all the service providers will not be exhibiting the same zeal and dedication to the assignment. It is for the Institution to identify, evaluate their skills, experience in the field (both Technical and Functional), Quality of Service provided and the projects executed by them. The Institution can as well get a list of projects under execution to get the feedback of their performance to decide on the right vendor and their suitability for the Project in terms of all the factors listed.